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Chart 1 – Caution is required in this market with the RSI and RMI in overbought territory and the MACD crossing to the downside after a bullish run.
While the Slow Stochastic has been volatile just lately with not particularly good signals is has just cross above overbought again.
As I have been saying the market was overextended from a technical perspective.
Chart 2 – As regular readers will know we have been looking at this chart for months now but have recently changed the Fibonacci Projection study. We have now reached the very strong overhead resistance at 1,351. We are also nearly at the big resistance level at 1,370 which is the 2011 high.
Obvious support and resistance on this chart so I won’t bother to spell out the levels but around 1,140 is critical and a good break of this sets up significant downside. 1,010 is very much on the cards if this level breaks in a big way. The market has broken below the 1,140 level but it closed last week above that level, we need a weekly break close below that level to set up a move down to 1,010.
The most significant thing this week would be a good break above that 2011 high.
Chart 1 – No real change in the technicals from last week. The MACD signal is still the main technical indicator for theShanghaitrend. The RSI is not overbought yet but is getting towards the upper line.
As said last week the upper Bollinger Band will continue to provide very good overhead resistance on a day by day basis.
But we should be careful as the MACD lines are starting to look like they are closing together. Keep a close eye as the closer the lines get the more you have to think about taking some profits on this year’s little upturn.
The broader market downturn since the beginning of last year is still in place however so don’t expect a sustained upturn anytime soon. The technicals still say take profits on upturns if you are playing this market shorter term.
Chart 2 – Having reached my long standing Fibonacci Projection target of 2088 I have redrawn a shorter term Fibonacci Retracement study on the latest price action.
As you can see the market has got through the 50 pct retracement after finding some resistance there.
Our 61.8 pct target is in sight and that could well be the turning point for this market. As the market hits that level look at the MACD and the RSI for indications that we could be in for a correction to this latest rally.
The Alexander Filter is saying beware as it is high as well.
Chart 3 – The Wall Street correlation is very volatile at the moment.
Chart 1 – A nice little rally which has taken the market overbought as you can see from the RSI and Slow Stochastic and we have broken above the highs of late last year.
Since last November the market keeps gravitating back to the $100 level and it continues to be a key level.
Chart 2 – The Fibonacci Projection Study, the black dots indicate the projection points, shows how the price action bounced very nicely off the 38.2 pct target level and then found some support at the 200-day Moving Average.
The break above the 38.2 pct target is significant and we need to redraw the FP. I’ll do that next week.
Chart 1 – A very similar picture to last week with the MACD crossing after the rally which began at the start of this year.
Chart one shows this very clearly and I’ve put on a simple Fibonacci Retracement study of that rise. As you can see we have already touched the 23.6 pct retracement and it providing very good support. When that breaks the target is the 38.2 pct level at 1,670.85.
Chart 2 – The signals here are still overbought and a good correction is still very possible. Look at the RMI as well.
The Bollinger is lending good support and resistance so do keep an eye on it at the upper line.
The RMI is around the overbought line still.
Chart 3 – We could be looking at a typical Dow Curve on the very long term chart. This could be similar to the Nadaq in 2000 where the peak is followed by a consolidation period which is followed by a sell off.
On this dual chart I’ve moved the current gold price action on a weekly chart back in time to 2000 when the Nasdaq turned around.
The Nasdaq pullback was a classic Dow Curve in as much as when a market peaks out after an overblown rally there is a period of consolidation after the peak when the real bears are offset by those who think the pullback is a better level to buy. In 2000 it was a classic and the true believers in the internet miracle fought against those investors who were convinced the whole internet boom was massively overdone.
Massive market rallies, such as we saw on the Nasdaq and more recently gold have to be watched carefully.
I’m not saying we are in the same situation now as the Nasdaq in 2000 but if I were holding gold I’d certainly be keeping it in mind.
Chart 1 – Still a nicely buoyant market but take note of the overbought indicators. A little like the other Asian markets the Nifty has enjoyed a good run up but the signals are starting to turn and be cautious if you are long, it might be time to think about taking interim term profits.
The MACD signal is still the stronger signal but now the shorter term overbought indicators are getting much more powerful as you can see from the RSI and RIM in this chart.
You have to beware of a correction.
Chart 2 – The bounce back has broken the downtrend line and there was a week long hesitation at the old Fibonacci Projection level at 61.8 pct.
Higher volume has helped drive this as you can see from the volume study.
A break lower in line with last year’s downtrend is still very much on the cards with 4,785 being the most important as a break of this targets 4,187.
Chart 3 – The 30-day Correlation with theUS market has broken down and the market is moving under its own steam.
:b��’O� :��8ct target is in sight and that could well be the turning point for this market. As the market hits that level look at the MACD and the RSI for indications that we could be in for a correction to this latest rally.
The Alexander Filter is saying beware as it is high as well.
Chart 3 – The Wall Street correlation is very volatile at the moment.
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Chart 1 – The hesitation in the price action signaled by the overbought indicators saw them come back a little but we are again now overbought with this latest little rise.
The good correction I have been expecting has yet materialize.
Yet again the Slow Stochastic and RSI are both still stretched above overbought.
With the flattening out of the price action the MACD lines have closed so watch for a cross to the downside there. You can see we have had a nice two month, intermediate term, upside trend as indicated by the MACD so a good correction to this is in the offing.
As per last week’s comment, I would still watch for a correction.
Chart 2 – The Fibonacci Projection 100 pct level is approaching and should lend good resistance.
You can see this latest move higher is on the back of slightly higher volume although the Alexander Filter is high. See what happened the last time the AF was above the upper line. I’m still favouring a correction to this market on the basis of this chart as well.
Once the MACD crosses on chart 1 I’ll freshen the Fibonacci Projection on this chart.
The technicals did not signal this latest little upturn but don’t get too excited because the overall and broad decline in place since Q2 2011 is still in place.
The correlation with Wall Street remains high.
